What is this Indemnification Provision in my Contract?

Definition

Indemnification is the action of protecting (someone) by promising to pay for the cost of possible future damage, loss, or injury. In a contract setting, it is a provision where one party promises to pay the costs of potential future liabilities incurred by the other party as a result of some defined set of circumstances that might occur because of the contractual arrangement.

Examples

The most common example of an indemnification agreement is an insurance policy. In an insurance policy contract, […]

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Directors on Nonprofit Boards

It is very popular to be on a nonprofit board for a church or charity. While a nonprofit does not have shareholders to whom a director is responsible, the nonprofit does generally have a constituency to whom the board is responsible, and in most instances, the attorney general of the state in which the nonprofit is organized has the right to act on behalf of the constituency to hold the board accountable.

Notably, the same general duties apply to the directors […]

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Director Liability for Improper Distributions

Generally, under statutes and bylaws, directors of a corporation decide whether to issue or redeem stock, whether to buy or sell assets, whether to distribute dividends or profits, whether to take out loans, pay debts, or invest in capital. Often, the Articles of Incorporation will provide some limits to the power of the directors by requiring that certain major decisions of the board be approved by the shareholders. Otherwise, the directors decide if the profits of the business get paid […]

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Weinstein v. Colborne Foodbotics, LLC: A Difference Between a Corporation and an LLC

Now that it is July, I am circling back to the topic of company start-up and entity structure issues.  In January and February, I highlighted several of the types of business entities:

Business Legal Entities and Structures: Sole Proprietorship
Business Structure and Entities: General Partnerships
Business Structures and Entities: Limited Partnerships
Business Structures and Entities: Limited Liability Companies (LLCs)
Business Structures and Entities: S Corporation
Business Structures and Entities: C Corporation

Today, I will highlight a significant difference between LLCs and Corporations in the context of a […]

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General Overview Regarding Sources of Business Risk of Liability to Third Parties

This month of May, we will be addressing various issues related to operational issues for businesses.  This post will give an overview of the primary sources of risk an average business is subject to as it relates to third parties.

Taking a page from one of my favorite authors, C.S. Lewis, there are too equal and opposite errors for businesses.  The first extreme is the business which ignores potential liabilities to third parties as either extremely remote, or non-existent.  The other […]

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Insurance for the Business

In previous discussions regarding running a business out of your home, we highlighted insurance issues that should be addressed.  This post goes into a little more detail on these issues.

Finding Business Insurance

The first step is to find a source for business insurance.  It is generally best to work with an insurance agent who represents multiple insurance companies so they can help you to find the best insurance policies, at the best price, for the particular needs you have.  You should […]

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